Obama’s 600,000 Fracking-Job Forecast Includes Lawyers, Realtors

New jobs in oil and gas were added in places such as North Dakota, where producers have spurred a fivefold increase in the Bakken, a geologic formation that stretches from southern Alberta to the northern U.S. Great Plains. Photo: Matthew Staver/Bloomberg

Jan. 26 (Bloomberg) -- The boom in natural gas produced
from shale rock will add U.S. jobs, though whether it supports
as many as President Barack Obama predicts depends on how you
count them, economists say.

In his State of the Union address this week, Obama said
hydraulic fracturing, in which a mix of water, sand and
chemicals is injected underground to free gas trapped in rock,
could support more than 600,000 jobs by the end of the decade.

The estimate was based in part on a forecast by energy
researcher IHS Global Insight, which counts people who actually
drill as well as “indirect jobs” in associated industries such
as lawyers, cement makers and real estate agents, said John
Larson, a vice president at IHS and the study’s lead author.

“Our preference is to stick to direct jobs,” Mark Muro,
policy director of the Metropolitan Policy Program at the
Brookings Institution in Washington, said in an interview.
“Once one gets into indirect and induced, it becomes very hard
to sort out truly new from reconfiguration of existing jobs.”

According to the IHS report, shale gas production in 2020
will be responsible for 248,721 direct jobs, 369,882 indirect
jobs and 504,738 so-called induced jobs, up from 148,143 direct
jobs, 193,710 indirect jobs and 259,494 induced jobs in 2010.

Induced jobs are driven by gains in direct drilling jobs
and include work in areas such as food services, entertainment
and housing, according to IHS.

By Trade Group

The December study was prepared for America’s Natural Gas
Alliance, a Washington-based industry group.

“We have a supply of natural gas that can last America
nearly 100 years,” Obama said in the Jan. 24 address. “And my
administration will take every possible action to safely develop
this energy.”

While jobs are being added in oil and gas extraction, the
sector is “relatively labor-unintensive,” Michael Feroli,
chief U.S. economist at JPMorgan Chase & Co., wrote in a Jan. 20
research note.

“Because oil and gas extraction is so capital intensive,
it is a big deal for the capital spending outlook,” Feroli
wrote. “The flip side is that it probably won’t be a major
driver of employment.”

Payrolls in mining last year rose by 89,300, the most since
1981 and up 13 percent from 2010. Oil and gas extraction
accounted for 25,200 of those jobs, the biggest gain in 30
years, according to the Labor Department.

North Dakota Growth

New jobs in oil and gas were added in places such as North
Dakota, where producers have spurred a fivefold increase in the
Bakken, a geologic formation that stretches from southern
Alberta to the northern U.S. Great Plains, and in Pennsylvania,
where drillers are tapping the Marcellus Shale, a formation that
may hold enough gas to supply the U.S. for six years.

Still, job gains in oil and gas are likely to be small
compared to the overall economy, according to Feroli.

According to the IHS report, the shale gas sector will
account for 1.1 million jobs in 2020, an 87 percent increase
over 2010, when so-called induced jobs are counted, Larson said.

“Look at a small town somewhere where a major manufacturer
has left and see all the businesses shuttered up,” Larson said
in an interview. “These are real jobs. They’re meaningful jobs.
They’re important jobs.”

Larson said he briefed White House officials on the report
last week.

Hydraulic fracturing or fracking has been criticized by
environmental groups such as Boston-based Environment America,
for threatening drinking-water supplies. Stephen Fuller,
director of the Center for Regional Analysis at George Mason
University in Arlington, Virginia, said job forecasts may not
include potential environmental harm from fracking.

“It could be the environmental cost is enormous and
totally outweighs the economic benefit that’s been touted,”
Fuller said in an interview. “People do count things
differently, sometimes to make their case.